Correlation Between Astec Industries and Lindsay

Can any of the company-specific risk be diversified away by investing in both Astec Industries and Lindsay at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Astec Industries and Lindsay into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astec Industries and Lindsay, you can compare the effects of market volatilities on Astec Industries and Lindsay and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Astec Industries with a short position of Lindsay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astec Industries and Lindsay.

Diversification Opportunities for Astec Industries and Lindsay

-0.77

Correlation Coefficient

Astec Industries  Lindsay

Pay attention - limited upside

The 3 months correlation between Astec and Lindsay is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Astec Industries and Lindsay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsay and Astec Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Astec Industries are associated (or correlated) with Lindsay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsay has no effect on the direction of Astec Industries i.e., Astec Industries and Lindsay go up and down completely randomly.

Pair Corralation between Astec Industries and Lindsay

Given the investment horizon of 90 days Astec Industries is expected to generate 1.14 times more return on investment than Lindsay. However, Astec Industries is 1.14 times more volatile than Lindsay. It trades about 0.13 of its potential returns per unit of risk. Lindsay is currently generating about -0.03 per unit of risk. If you would invest  3,092  in Astec Industries on February 1, 2024 and sell it today you would earn a total of  1,088  from holding Astec Industries or generate 35.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Astec Industries  vs.  Lindsay

Astec Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astec Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Astec Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lindsay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lindsay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Astec Industries and Lindsay

The main advantage of trading using opposite Astec Industries and Lindsay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astec Industries position performs unexpectedly, Lindsay can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lindsay will offset losses from the drop in Lindsay's long position.

The idea behind Astec Industries and Lindsay pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.